April 15, 2013 Egyptians are getting hungry. The fall of the Egyptian pound to just 60% of its 2012 exchange rate against the dollar has priced everything but bread out of the reach of the poorer half of the population, and the bread supply is now at risk.

The news late last week that Libya and Qatar may lend US$5 billion to Egypt was overshadowed by reports that Cairo owes $5 billion to the oil companies that produce oil and gas on its territory. Half of the amount is overdue, and oil companies reportedly expect to wait years for payment. Egypt’s arrears on trade credits from suppliers of oil, wheat, and other essential items probably exceed its $8.8 billion cash reserves, leaving the country flat broke.

With a trade deficit running at $32 billion, the Libyan and Qatari money covers just a couple of months; stiffing the oil companies might have covered the past couple of months. If the Egyptian government finally comes to terms with the International Monetary Fund for a $4.8 billion loan, that will cover another few weeks.

Egypt’s finances have been in free fall since the mid-2000s, when prices for food and other essential imports soared while export earnings for cotton and other products stagnated. At $60 billion, the country’s trade deficit is a seventh of its gross domestic product. The 40% fall in the exchange rate of the Egyptian pound from 6 to the dollar late last year to 8.25 on the black market last week will raise the cost of imports even further.

The half of Egyptians that lives on $2 a day no longer eats beans, let alone milk products.

The price of fava beans, the country’s second-most important food staple, has already risen by 40% this year, to 5,000 Egyptian pounds (US$728) per ton from $3,000 Egyptian pounds in January. Imports of proteins have collapsed, according to the Egyptian Gazette:

”As for frozen food imports, namely meat, fish and chicken products, they fell by 25 per cent during the first three months of the year, compared to the same period a year before due to the surge in the dollar,” said Alaa Radwan, a member in the Food Stuff Industries at the FECC. Radwan, who is also head of the Association of the Meat, Fish and Chickens Importers, explained that banks had suspended offering importers with letters of credit, demanding them to seek dollars from the parallel market, which caused frozen food prices to increase by 25 per cent to 39 per cent.

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